Strategic Management Schools of Thought

Topics: Strategic management, Management, Strategic planning Pages: 5 (936 words) Published: September 14, 2012
By Henry Waruhiu ESAMI

Henry Waruhiu

Digitally signed by Henry Waruhiu DN: cn=Henry Waruhiu gn=Henry Waruhiu c=Kenya l=KE o=ESAMI ou=ESAMI Reason: I am the author of this document Location: Date: 12/13/11 12:52:31

“We are the blind people and strategy formation is our elephant”

A wealth of information creates a poverty of attention.
Herbert Simon, Nobel Laureate Economist

SM Schools of thought
1. 2. 3. 4. 5. 6. 7 8 9 10

The Design School The Planning School The Positioning School The Entrepreneurial School The Cognitive School The Learning School The Power School The Cultural School The Environmental School The Configuration School

The Design School
 Emphasis on the environment (SWOT)  Strategy formation must be a deliberate process of

conscious thought (intuition, thinking)  The Plan is the CEO’s  The process must be informal  The Process of formulation is key  The grand strategy (turn key) must be had – the grand conception – the big picture…no emergent strategies here  Strategy is Perspective  Goal is to fit/match internal capabilities to external


The Planning School
 Highly formalised approach though  Rather than thinking about values, set

objectives 1st  External and Internal Audits  Strategy formulation  Strategy operationalization  Strict levels/hierarchy of strategy –  Master plan  Uses formal procedures and heavy on analysis

The Positioning School
 Rooted in Military Maxims – Sun Tzu et al  BCG…of stars, cash cows, question marks

and dogs  Porter’s 5 forces: entrants, suppliers, buyers, substitutes, rivalry  Porter’s generic strategies: cost leadership (low cost producer), differentiation (uniqueness) & focus (narrow segment)

The Positioning School
 Premises:  That the market place is competitive  Strategy formation is about selecting

position  Strategy is all about position in the market place  Only certain strategies are desirable based on competitive advantage: Porter’s Competitive Analysis Model

The Entrepreneurial School
 Strategy is about perspective

with vision  Strategy making dominated with opportunity search  Power is centralised in the CEO in the organization  Growth is the dominant goal  The “Leader’s” vision is paramount and the human capital focus is on executing “new” opportunities

The Entrepreneurial School
 Dramatic forward leaps for

dramatic gains  Strategic vision is malleable and impacts organizational culture and structure  Concern: Build visionary organization that outlasts leader

The Cognitive School
 Strategy formation is a cognitive

process that takes place in the mind of the strategist  Perspectives, road maps, concepts are the output defining treatment of inputs  Thus strategies are concepts, perception  Focus is the human mind, brain

The Learning School
 Strategy is primarily pattern  Strategy making is a process

of systemic learning often with retrospective wisdom  The role of leadership is not to preconceive but to manage the learning process

The Learning School
 Focuses on how strategies actually

“emerge” and form in an organization  The focus is on the collective system; many potential strategists in any given organization  Learning from failure and mistakes  Continuous re-examination  Learning from diversifying  Learning from outside sources  Goal: Migrate from organizational learning to a learning organization  Goal: Management of change  Balancing tacit and explicit knowledge

The Power School
 Strategy formation is a process of negotiation  Strategy formation is shaped by power and

politics  Strategies then are more of ploys and positions rather than perspectives  The negotiations occur both at the micro (intra) and Macro (inter) levels of organisations

The Cultural School
 Strategy formation is a collective process  Strategy formation is a...
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